Auto insurance overhaul moving to the Michigan House

michigan auto insurance

michigan auto insuranceThe lawmakers will be considering a change to the system to cap payouts for catastrophic injuries.

After passing out of committee along party lines, last week, legislation for placing a cap on auto insurance catastrophic injury payments at $1 million is now headed to the House in Michigan.

Should the bill pass, it would eliminate the unlimited lifetime medical benefits for accident victims next year.

It would mean that anyone injured in an accident as of January 1, 2014, will have a limit to the payments that will be available to them for the treatment of those injuries. Since 1978, Michigan has been a no-fault auto insurance state. This decision was made at the same time that the Michigan Catastrophic Claim Association was created, to ensure that benefit amounts would be improved for the payment of vehicle accident injuries.

This additional coverage was for auto insurance payouts by insurers that exceeded $500,000.

The funding for this additional auto insurance coverage was provided through annual fees that are paid by drivers, per car. This amount has steadily increased since the time that the fee was first created. In fact, starting on July 1, it will increase once again, to bring the fee from its current $175, up to $183.

Last month, a number of Republican leaders called on the Legislature to take on auto insurance coverage reforms in order to help to control the increasing costs for drivers, and to make the policies in Michigan more competitive. Governor Rick Snyder threw in his own support for this call.

Snyder stated that “Michiganders have seen their auto insurance rates rise faster than any other state in the country.” He also added that “It has been 40 years since the no-fault system has been implemented and it’s long overdue for review.” He expressed his hope that making these changes will help to develop a policy within the state that still provides accident victims with the benefits that they require, but that will also be able to keep cost under control so that families in the state will have some relief from this ever increasing expense.